Soy futures on the Dalian Commodity Exchange rebounded slightly. The most active September soy contract rose 0.6% to close at RMB4,331 (US$683)/tonne, while the May soyoil contract ended 1% higher at RMB8,852 (US$1,397)/tonne.

The state stockpiler China Grain Reserves Corporation has already started purchases of this year's new soy in major growing areas at the protective price of RMB4,000 (US$631)/tonne. Market analysts say that the stockpiling programme will break the deadlock on the soy purchase market. As traders and soy crushers begin purchases, the domestic soy market is expected to improve in the following period.

Zhengzhou cotton retreated after rising sharply last Friday, with the May contract ending 0.31% lower at RMB20,615 (US$3,253)/tonne. The national cotton price index CCIndex 328, which indicates the average price of standard lint in China, closed at RMB19,067 (US$3,009)/tonne Monday, up RMB2 (US$0.31) from Friday.

Cotton prices both on the futures and spot markets have increased recently as the state stockpiling policy started to play a positive effect in regulating market supply. Meanwhile, decreasing stocks of downstream enterprises also helped prop up cotton prices.

Spot traders are still bearish about cotton prices as demand from downstream industries is difficult to warm up in the short term. However, futures analysts hold good outlook for the cotton market in consideration of restocking demand as well as traditional booming season for textiles sales after the Spring Festival.